China’s inflation is soaring, but the government may go overboard in trying to bring it under control, says Daryl Jones, managing director at research firm Hedgeye.

“Data that we've seen over the past few weeks has pointed us toward one simple conclusion: China is experiencing serious inflation,” he says.

In April for example, year-over-year increases in consumer and producer prices added up to 9.6 percent, the largest figure in 18 months.

The key issue is money supply, which jumped 21.5 percent in the last year, Jones wrote in Fortune magazine. “If it continues to grow, inflation will continue to accelerate.”

China is taking steps to slow price increases, such as increasing bank reserve requirements and pushing interest rates higher.

“As of now, the Chinese economy is signaling the need for more aggressive tightening,” Jones maintains. But that could push real interest rates into negative territory, discouraging savings.

“What worries Chinese economic planners considering these fixes is that rather than just slow down growth, they have the potential of popping the bubble,” Jones wrote.

So China has a tough balancing act. “Nearly every time we've seen this movie before, the ending is the same,” Jones warns.

Some experts fear China’s stock market will crash.

"Remember, China is supposed to save the world,” Dow Theory Letters publisher Richard Russell told subscribers, according to MarketWatch.

“The way the Chinese stock market is going, who's going to save China?"